Companies that just went public aren’t the most popular option for investors looking to buy stocks this year. With the S&P500 shedding almost 20% of its value, and economists warning investors of an impending recession, most people have retreated to safer stocks. Moreover, the coronavirus pandemic and the market downturn combined with high-interest rates have made many companies rethink their plans for an initial public offering (or IPO) in the stock market.
While that may be unnerving for many investors, companies with profitable and up-and-coming businesses still exist. Some of these companies can gain a big name in their industry, and investing in them now can be highly rewarding in the long run. Almost all the top companies today became public through an IPO process, such as Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), Apple (NASDAQ:AAPL), and Tesla (NASDAQ:TSLA).
Of course, finding the next Alphabet is like finding a needle in a haystack. However, that does not mean that some of these new stocks can’t still turn out to be lucrative investments in the future. If you are willing to take the short-term risk, these three new stocks have the potential to be multibaggers.
| MBLY | Mobileye | $28.00 |
| LEV | Lion Electric | $2.81 |
| UDMY | Udemy | $14.46 |
Mobileye (MBLY)
Mobileye (NASDAQ:MBLY) is a company owned by Intel (NASDAQ:INTC) that recently went public. The company develops and supplies autonomous driving technologies and advanced driver-assistance systems (or ADAS) for vehicles. With the rise in interest in self-driving cars and electric vehicles (or EVs), Mobileye is on the right track to more profitability.
In the future, Mobileye could be a major supplier of cameras, computer chips, and software to automakers worldwide. As of now, its customers include General Motors (NYSE:GM), BMW (OTCMKTS:BMWYY), Nissan (OTCMKTS:NSANY), Volkswagen (OTCMKTS:VWAPY), Ford (NYSE:F), Toyota (NYSE:TM), and Nio (NYSE:NIO). Of course, many of these partnerships are not significant, but the potential for Mobileye going forward is substantial.
Moreover, the company’s financials are solid as of Q2, with top-like revenue growing at 41% year-over-year to $460 million. Operating income was also up 43% year over year to $190 million. Thus, I believe MBLY is one of the top new stocks to buy.
Lion Electric (LEV)
Lion Electric (NYSE:LEV) is a manufacturer of commercial vehicles. At first, it might look like just another dull electric vehicle stock trying to compete with more experienced players on the market. However, the company has some catalysts that can pave the way for more upside in the long term.
The most significant catalyst for the company is the electrification of school buses. Both the U.S. and Canadian governments are starting to fund the electrification of school buses which can cost up to $200 billion. Just yesterday, Vice President Kamala Harris announced $1 billion in grants for electric school buses. Moreover, The company manufactures its own chassis, body, and battery packs and designs its own proprietary operating software for its vehicles. As a result, production is cheaper.
Of course, competitors such as Blue Bird (NASDAQ:BLBD) exist, and I believe they will be the largest beneficiary of these grants. However, I think LEV stock offers much more upside since it seems to be bottoming out after a decline of 92%-plus from its peak. The price-earnings ratio of 2.87 times is also very attractive.
Udemy (UDMY)
Udemy (NASDAQ:UDMY) is an online learning and teaching platform with more than 54 million students worldwide. UDMY stock started declining from its $29 IPO price and has been trading sideways at a share price of $11-16 this year.
With technological progress, more people are becoming interested in developing their technical skills. For example, interest in the search term “learn coding” has increased by 6.7x in the last ten years, according to Google. The trend will only continue as more technical knowledge becomes necessary for white-collar jobs. As a result, Udemy is well-positioned to gain from these trends and could become the go-to platform for paid online courses.
If the company sustains its top-line growth of above 20% year over year, it can soon narrow its losses. Moreover, with the increasing interest in white-collar jobs, there is much more room for growth.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.